Mansion tax grab from Westminster Council

Reforming the City of Westminster’s council tax – which is currently only two-thirds that of of equally posh neighbouring borough Kensington and half that of up-and-coming Camden – is a no-brainer for reasons described in the other posts on Council Tax. Westminster’s councillors have shown no appetite to do so, but now the unexploited tax opportunity has been spotted by national political parties too, with Labour’s leader saying that they will impose an annual ‘mansion tax’ on houses worth over £2m. The Liberal Democrats have been flirting with the same idea for a long time. Around one in ten properties in Westminster would be affected, generating well over £100m a year for central government instead of for the City of Westminster. Can Westminster Council continue to leave this goal open now that national politicians have spotted it?

Before 2011 national government rules capped local government council tax increases at 2% in any year, and Westminster was trapped by its historic strategy of keeping council tax rates low and funding its roads out of parking charges instead. But now Westminster could easily impose a local ‘mansion tax’ under the new Localism Act, which allows an across-the-board increase in council tax to be made acceptable to voters in a local referendum by giving rebates to lower bands. Fairer council taxes would make it harder for national politicians to claim that the rich are not paying their share. Even an increase of the top band of council tax to match Kensington – hardly enough to provoke a mass exodus of the wealthy – would generate £10m a year for Westminster. But instead, Westminster is continuing its strategy of improving the parking product. It is investing in parking bay sensors which will inform a smartphone app where and when a parking space is free and make the borough even more attractive to vehicle traffic.

Westminster’s devotion to its parking product is not only leaving money on the table from missed Council Tax opportunities – it is courting trouble in the shape of competition from Crossrail (three large new high-speed rail stations in Westminster making it more accessible by public transport) and from new public health studies that identify the health hazards from motor traffic in Westminster as worse than anywhere else.